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Inviragen Risky, SingVax Less: They Marry in Vaccine Heaven

Staff Writer

Inviragen LCC and SingVax Pte Ltd. merged their preclinical vaccine pipelines and closed a $15 million Series A financing to tackle infectious diseases affecting emerging markets.

The merger "took a long time to put together," acknowledged Fred Schwarzer, managing partner with Charter Life Sciences, which led the effort.

Schwarzer explained that merging two small biotechs means agreeing on relative valuations, ensuring the investors can play nice in the sandbox, planning for future funding, prioritizing the pipelines and figuring out the new operational structure. "It requires a lot of stars to line up," he said.

So even though biotech industry experts claim further consolidation is needed to thin out the still-overcrowded herd, Schwarzer is "not optimistic" that much of it will come from mergers.

That said, Schwarzer and his syndicate are betting the Inviragen-SingVax merger will be worth the effort.

Inviragen was founded in 2003 based on technology licensed from the Centers for Disease Control and Prevention. The Fort Collins, Colo.-based company has a tetravalent attenuated dengue virus vaccine in late preclinical development, as well as earlier-stage vaccine programs for West Nile virus, chikungunya, human papillomavirus, influenza, plague and smallpox. (See BioWorld Today, Nov. 29, 2007.)

Inviragen was raising a Series A financing in early 2008 when Charter agreed to lead the round. But establishing a syndicate proved challenging because, on top of the difficult economic environment and general bias against early stage companies, a "huge percentage of U.S. investors had no interest in vaccines for emerging economies," Schwarzer said.

At the same time, Bio*One Capital was raising a Series A round for Singapore-based SingVax, which was in preclinical studies with an inactivated virus vaccine for hand, foot and mouth disease (HFMD), as well as vaccines for Japanese encephalitis and chikungunya. Charter and Bio*One previously had invested in syndicates together, and they began the long, arduous process of combining what they saw as two complementary companies.

Financial terms for the merger were not disclosed, but the merged entity will assume Inviragen's name and headquarters while retaining vaccine development operations in Singapore. The $15 million Series A financing, which also included U.S.-based Venture Investors LLC and Singapore-based Phillip Private Equity, will be delivered in undisclosed tranches.

Before the financing, the combined company had $13 million in nondilutive grant funding, according to Inviragen CEO Dan Stinchcomb. The money should last into 2012 and will support clinical trials with the vaccines for dengue, HFMD and Japanese encephalitis, all three of which should be in humans within 18 months.

Schwarzer said he likes the idea of balancing Inviragen's high-risk dengue program with SingVax's lower-risk HFMD and Japanese encephalitis programs. And although other VCs were skeptical of focusing on vaccines for emerging markets, Schwarzer said Charter discussed at its recent partner meeting that it expects to see a "huge amount of growth" from emerging economies as per capita income rises and people spend more money on their health care.

"It tells you these markets are going to continue to grow and grow faster than traditional markets," Stinchcomb said. And thanks to tiered pricing, there is an "opportunity for better margins than you might expect," he added.

Inviragen isn't the only company thinking along those lines. Others with dengue vaccines include Hawaii Biotech Inc., GlaxoSmithKline, AVI BioPharma Inc., Immunotope Inc., Bavarian Nordic and others. And last year, Sanofi paid $549 million to acquire Acambis plc for its Japanese encephalitis, West Nile, dengue, smallpox, flu and other vaccines. (See BioWorld Today, July 28, 2008.)

Stinchcomb said Inviragen is "open to discussions" about partnerships, but he added that it's "nice" that the company now has the funding to conduct its own clinical trials.